Morgan Stanley says changing to Proof of Stake might not solve Ethereum's scaling problems.
An equity strategist for Morgan Stanley claims Ethereum beacon-mainnet merge will cause demand for graphics processors to plummet in the coming months.
The Ethereum platform has been undergoing a parade of testnets preparing for its merge with Beacon Chain. This merge is a move to facilitate the blockchain’s transition from operating a Proof of Work model, to Proof of Stake.
The PoW consensus model understandably consumes too much energy, enough to raise numerous regulator eyebrows. Consequently, it became inevitable for an alternative validation method, PoS, which is less energy-intensive.
Ethereum’s developers estimate that the merge will happen sometime between August and September if nothing comes up to disrupt plans.
Sheena Shah Says PoS will Render Mining Obsolete
In response, Sheena Shah of Morgan Stanley Investment in her research paper published Monday stated that GPUs will be affected. The equity strategists explained that Ethereum and its major competitor, Bitcoin, both run a proof-of-work operation model that requires mining. Ethereum Miners need the power-draining Graphics Processing Units (GPUs) needed to hash new Ether. Shah insists that if the platform no longer operates PoW, then mining and miners will become obsolete. Consequently, the demand for GPUs will drop as the PoS method does not need processors.
Other Platforms Prepare to Welcome Miners
A different analysis by Bloomberg, however, predicted that mining will not cease until the merge occurs in the third quarter of this year. Additionally, some miners are considering shifting to another network that supports their activities instead.
The teams of Revencoin and Ethereum Classic are positioning themselves to take advantage of this turn of events. Already, Ethereum Classic is reaching out to miners to assure that the 2020 Thanos upgrade is favorable for long-term mining. This is because it slowed down the DAG’s hash rate. Ideally, moving to such platforms will help them retain value for their equipment.
The preceding 1½ year has seen crypto impact the gaming graphic market bringing almost 14% revenue while boosting pricing. Major GPU manufacturers such as Nvidia have insisted that they have hedged against crypto-concerned downturns.
However, Shah’s research paper maintained that the Ethereum Mainnet merge could adversely affect Gaming GPU prices as early as the first quarter of 2023 if it goes through. Finally, the paper mentioned that a move from PoW consensus to PoS is unlikely to solve the blockchain’s issues of scale.